U.S. efforts to boost India's solar industry could open a back door to China's banned product modules.
India's largest solar producer, Waaree Energy***, has exported millions of solar panels to the U.S., with components from a Chinese company, China's LONGi Green Energy Technology, according to a Bloomberg News investigation of import records in India and the U.S
The import of Wari panels has raised questions about how U.S. Customs and Border Protection** enforces the ban, which is linked to China's Xinjiang. Since the ban began in June 2022, U.S. Customs and Border Protection has detained thousands of shipments of solar panels made by Chinese-owned companies. However, these companies can overturn the ban by providing evidence that their chains do not involve Xinjiang.
The focus on China has created opportunities for Indian solar producers, with India exporting nearly $2 billion worth of solar panels to the US in the first 11 months of last year, a five-fold increase over all of 2022, according to data compiled by Bloomberg NEF.
In August 2023, Laura Murphy, one of the authors of a report on the solar **chain, had said in October before being appointed as Customs Enforcement Adviser to the Department of Homeland Security: Even if it is indicated'Made in India'The battery panels are also likely to have Xinjiang factors. She said in the report that the panels produced at the LONGi plant in Southeast Asia are often mixed together because polysilicon from multiple origins in China is often mixed"Most likely"At least some materials from Xinjiang were used.
LONGi, the world's largest solar producer based in Xi'an, China, did not respond to a request for comment. In response to Murphy's report, the company said it had set up a separate ** chain for the U.S. market, using only non-Chinese ** materials.
Sunil Rathi, sales director of Wari Inc., said in an emailed statement that the Indian company"We have been complying with the laws of the jurisdictions in which we operate"。He said, customers"There are strict requirements, and they make sure that every shipment of our goods meets these requirements"。
The global focus on China** imprisoning or forcing members of the Uyghur minority to work in factories led to the Uyghur Forced Labor Prevention Act (UFLPA) enacted by the Uyghur Congress in December 2021. China** has denied any human rights abuses in Xinjiang, saying its policies are aimed at education, eliminating extremism and alleviating poverty.
Some members of Congress and industry groups have criticized poor customs enforcement, which covers a range of products from tomatoes to shoes. According to an analysis of customs data by the National Council of Textile Organizations, the value of clothing and textiles detained for inspection by customs in the first seven months of 2023 decreased by 52% compared to the previous seven months. At the same time, the value of seized electronics rose by 6 per cent.
A spokesman for the General Administration of Customs said that the General Administration of Customs"A dynamic, risk-based approach to enforcement is adopted, prioritizing action on the most risky shipments, based on a dynamic data and intelligence environment"。
Since June 2022, customs have detained $2 billion worth of electronics, which industry analysts say are mostly solar panels, according to the General Administration of Customs**. After reviewing the chain documents, they banned about a quarter of the products for violating the UFLPA.
Customs did not identify the companies affected by the actions, even though U.S. imports of solar products hit a record high last year. Enforcement in the United States** is focused on solar products from Southeast Asia, where Chinese companies, including LONGi, shifted production a decade ago, in part to circumvent U.S. tariffs, the agency's data showed.
LONGi has acknowledged the impact. At the September earnings conference, Zhong Baoshen, chairman of LONGi, mentioned that due to the refusal of customs to enter the United States, its products were refused"Large-scale impairment"。He said:"With no access to the U.S., we need to process the return of these products and resell them globally."
Since then, some of Longi's shipments have started passing through U.S. customs, indicating the company's progress in building a U.S. ** chain that doesn't rely on Chinese polysilicon, Philip Shen, an analyst at investment bank Roth Capital Partners, wrote in an October note.
Pol Lezcano, a solar industry analyst at Bloomberg NEF, said it was not yet known that any shipments from Indian companies were being detained. Lezcano said of law enforcement in the United States:"It's very false, it's aimed at big companies in China. If you're a large company based in China, the likelihood of your goods being held at the border is higher. "
In the first 11 months of last year, Indian products accounted for 93%, up from 1. for all of 20229%。The data shows that imports in the first 11 months of 2023 increased from 06 gigawatts jumped to 44 gigawatts, or about 11 million panels. Most of them are from China.
China produces more than 80% of the world's polysilicon, which is used to make solar panels, and Chinese companies produce about 98% of silicon ingots and wafers. According to BNEF data, about one-third of China's polysilicon capacity is in Xinjiang, which accounted for 54% of total polysilicon capacity before the ban. But there isn't enough non-Chinese polysilicon to meet demand, which means some producers need to source polysilicon from China, Lezcano said.
Shannon O'Neill, a senior fellow at the Council on Foreign Relations in New York, who wrote about the global ** chain, said:"CBP does not have the resources and capacity to fully enforce it"Xinjiang import ban"。He said:"The United States had to pick and choose cases, and in the process of choosing cases, geopolitics really worked".
Biden has been trying to nurture alternative chains in countries that are seen as allies, a policy that is called"Friends"to counter the dominance of China's manufacturing industry. During her visit to India in 2022, U.S. Treasury Secretary Janet Yellen spoke about U.S. support for India's solar manufacturing industry, including $500 million in debt financing for the largest U.S. solar manufacturer's plan to open a factory in India. She also mentioned the need to diversify from China.
The U.S. first banned polysilicon imports from Xinjiang in 2021, when polysilicon was added to the list of goods deemed to be produced with forced labor. The following year, the U.S. Federal Labor Code was enforced in the United States. According to the Act, the United States ** adopts the so-called"The presumption is rebuttal", that is, products related to Xinjiang are produced with forced labor.
Importers can challenge this finding by providing documentation that their ** chain does not rely on polysilicon from Xinjiang. But polysilicon is mixed with material from other parts of China, so it is difficult to provide such proof.
The production process of polysilicon involves mining quartz, which is then crushed and heated to produce metallurgical-grade silicon, or MGS. This material is refined into polysilicon, which is melted into ingots, then into silicon wafers, and eventually into solar cells, which make up solar panels.
The report, "Over**", co-authored by Murphy, a professor at Sheffield Hallam University in the United Kingdom, and Alan Crawford, a solar consultant, pointed out that MGS and polysilicon from different parts of China are often mixed together, which could bring Xinjiang materials together"Introduced""In any batch of product produced by a company that sources any quantity of material from the region"。
A 2021 consultation report from the United States cited evidence of forced labor practices at every stage of the solar chain in China. According to the advisory report, most of the world's solar products are likely to continue to be associated with Xinjiang.
Industry analysts have come to a similar conclusion. Reginald Smith, solar industry analyst at Boston-based eventide asset management, said:"Based on our ongoing industry research, we believe that small solar module manufacturers outside of China, including those in India and Southeast Asia, are using material inputs from China that may, and in some cases, most likely, be at risk of forced labor while continuing to export to the United States."
The Overexposure Report is a compilation of publicly available records, company annual reports, press releases, customs data, email correspondence with the company, and more**.
The ** chain map in the report shows the connection between Xinjiang polysilicon and LONGi's factories in Southeast Asia. But a rebuttal map provided by LONGi and included in the report says the company has built a separate ** chain for the United States, using only non-Chinese ** polysilicon.
Neither this claim nor Murphy's claim can be independently confirmed. However, according to SHEN of Roth Capital partner in a note in July, customs ** refused to allow LONGi modules containing polysilicon produced in China to enter the U.S. market. In a separate September report, Roth wrote that the Longi modules later released by US authorities may contain other** polysilicon.
*Since mid-2022, WAAREE has received hundreds of batches of solar cells from Longi's factories in Malaysia and Vietnam that convert light energy into electricity needed for solar panels, according to Indian customs records compiled by data aggregator Import Genius and reviewed by Bloomberg.
India has limited capacity to produce its own solar inputs, but it has ambitious plans to build vertically integrated manufacturing to take advantage of opportunities in the US market and at home. Waaree, which has three factories in Indian Prime Minister Narendra Modi's home state of Gujarat, has announced plans to use incentives to expand production capacity and develop its own solar cell and wafer production over the next two years. The company plans to open a factory near Houston later this year and is seeking approval for an initial public offering to raise up to Rs 30 crore (Rs 3.).$6.2 billion).
Longi also has plans to produce it in the United States. The company recently began producing modules at a plant in Ohio, a joint venture with Chicago-based renewable energy company Invenergy.
U.S. import records show that Waaree's products have been shipped to residential and commercial solar** businesses in California, North Carolina and Texas, including Red-Tailedhawk and Danishfields solar farms near Houston. Neither project responded to requests for comment or independently confirmed whether the components of the panels were made from Xinjiang materials.
India is poised to further expand its share of the US solar market this year, when anti-dumping and countervailing duties on solar products from Southeast Asia will come into effect in June.
The customs department responsible for UFLPA's enforcement, Eric Tsai, said in a webinar hosted by risk intelligence company Kharon in June that third-country risk"Probably the highest risk right now"。
sheridan prasso|Bloomberg, February 5, 2024.